A fully managed PaaS relational database built on SQL Server. Microsoft manages the hardware, OS, patching, and automatic backups. The customer only manages the schema and data.
The AZ-900 example of a PaaS database. Difference from SQL Server on a VM (IaaS): with Azure SQL you never touch the OS. Question: main advantage of Azure SQL over SQL Server on a VM? Not having to manage the OS or patches.
Azure SQL Database is a concept that can show up on the exam. Check the full guide to see it in context.